Understand construction loans in SWFL: types, draw schedules, inspections, and permit milestones. We are licensed contractors who support your lender’s requirements from plans to close-out.
Construction financing can be confusing if it is your first project. This guide explains common loan types in SWFL, how draw schedules work, what lenders verify (plans, permits, inspections, lien releases), and how our licensed team keeps your project on track from submittals to close-out.
(permits & inspections • lanai extensions • screen enclosures Book On-Site Consultation)
A construction loan is a short-term financing option used to fund the building of a new home or major renovations. Unlike traditional mortgages, which are based on the home’s existing value, construction loans are based on the projected value of the property once construction is completed. These loans offer flexible terms, typically disbursed in stages as the project progresses, ensuring that funds are available when needed. Benefits of a construction loan include customized financing tailored to the specific needs of the project, interest payments only on the amount drawn, and the ability to convert to a permanent mortgage once the construction is finished. This financing approach allows homeowners or developers to manage cash flow effectively and complete projects without the financial burden of upfront costs.
Below are the 5 steps that you must follow in order to build your home using a construction loan.
Loan Term: Construction loans usually have a term of 12 to 18 months.
Interest Rate: Interest rates are typically variable and slightly higher than traditional mortgage rates.
Disbursement Schedule: Funds are released in stages, known as “draws,” aligned with the project’s completion phases.
Interest Payments: Borrowers only pay interest on the funds drawn during the construction period.
Conversion: Many construction loans can be converted into permanent financing once the project is finished.
If you have a trusted financial institution for your construction loan, fill out their application. If you are still considering financial institutions, we suggest you look into Sanibel Captiva Community Bank, a trusted leader in construction loans in SWFL. Information and application can be found on their Residential Lending page.
It’s helpful to start gathering documentation early in the process. Though you won’t be asked for these immediately, having them ready can expedite the loan process. Typically, the documents you’ll need include:
Before closing, your builder may require a deposit to cover initial costs such as prints, surveys, and permitting. Most lenders will only close once the permitting process is near completion, typically within one or two weeks of issuance.
By following these steps and understanding the process, you can secure a construction loan that meets your needs and ensures a smooth path to building your dream home.
In a construction loan, it’s essential that the contractor adheres to a pre-established draw schedule, which outlines when and how funds will be released throughout the project. The lender will only disburse additional funds once the work from the previous draw has been independently verified as satisfactorily completed. This ensures that the project stays on track and that the lender maintains oversight of the progress. Regular inspections by the lender or a third party are typically required to confirm that each phase of construction has met the agreed-upon standards before releasing the next portion of funds. Sticking to this schedule is crucial for keeping the project financed and moving forward smoothly.
Construction-to-Permanent
Converts to a long-term mortgage after completion; typically interest-only during build. Often a single closing.
Stand-Alone Construction
A separate construction loan refinanced when the project is done. Usually two closings but offers flexibility on the end mortgage product.
Renovation / Additions
Targeted financing for expansions and upgrades: lanai extensions, screen enclosures, roofing, structural improvements, and drainage/culverts where applicable.
Tip: Ask your lender how they define milestones and the documentation expected at each draw.
See how we manage permits and inspections on our Construction Permits page.
Outcome: Fewer resubmittals, faster draw approvals, and a predictable path from ground-break to final.
Your lender may add interim checks. We adapt documentation to their checklist.
We identify these early and build a contingency into your plan.
Need help aligning scope, permits, and lender requirements? Book a call to receive:
Do you provide financing?
We are not a lender. We align scopes, permits and inspections, and documentation to support your lender’s requirements.
How are draws approved?
Lenders verify milestone completion using inspections, photos, and lien releases tied to each phase.
Can you help if my bank requested corrections?
Yes. We update drawings/scopes, address reviewer comments, and resubmit promptly.
